Business2026-02-1812 min read

How to Start an LLC in 2026: Costs & Steps for All 50 States

A Limited Liability Company (LLC) is the most popular business structure in the United States for good reason. It combines the liability protection of a corporation with the tax flexibility and simplicity of a sole proprietorship. Whether you are launching a freelance business, starting an e-commerce store, or formalizing a side hustle, forming an LLC is one of the smartest first steps you can take. In this comprehensive guide, we will walk through every step of the process, break down costs by state, and help you understand the ongoing requirements to keep your LLC in good standing.

Why Form an LLC?

Before diving into the how, let us address the why. An LLC provides several key benefits that make it attractive for small business owners and entrepreneurs.

Personal liability protection. Your personal assets (home, car, savings) are generally protected from business debts and lawsuits. If your LLC is sued, only business assets are at risk.
Tax flexibility. By default, a single-member LLC is taxed as a sole proprietorship (pass-through taxation), meaning profits flow to your personal tax return. You can also elect to be taxed as an S-Corp or C-Corp if it saves you money.
Credibility. Having “LLC” after your business name signals professionalism to clients, vendors, and banks.
Simplicity. Compared to corporations, LLCs have fewer formalities. No required board meetings, no stock issuance, and minimal annual reporting in most states.

Step 1: Choose Your Business Name

Your LLC name must be unique within your state and typically must include the words “Limited Liability Company,” “LLC,” or “L.L.C.” Most states let you search their business name database online for free. Here are some naming tips:

Make sure the name is not already taken in your state
Check if the matching domain name and social media handles are available
Avoid names that could be confused with government agencies
Some states restrict words like “Bank,” “Insurance,” or “University” without special approval
Consider filing a name reservation ($10-$50) if you are not ready to form immediately

Step 2: Choose a Registered Agent

Every LLC must designate a registered agent (sometimes called a statutory agent) in the state where it is formed. This is a person or company authorized to receive legal documents, tax notices, and official correspondence on behalf of your LLC. You can serve as your own registered agent in most states, but many business owners prefer to hire a professional service ($50-$300/year) for privacy and reliability.

Step 3: File Articles of Organization

This is the core legal document that officially creates your LLC. You file it with your state's Secretary of State (or equivalent agency). The form typically asks for your LLC name, registered agent information, principal address, organizer name, and whether the LLC will be member-managed or manager-managed.

Filing fees vary significantly by state:

Cheapest states: Kentucky ($40), Arkansas ($45), Colorado ($50), Mississippi ($50), Arizona ($50)
Most expensive states: Massachusetts ($500), Tennessee ($300 + $50 per member), California ($70 filing + $800 annual franchise tax), Illinois ($150)
Average cost: Most states fall in the $50-$150 range

California is a special case: while the filing fee is only $70, every LLC must pay an $800 annual franchise tax starting in its first year, making it one of the most expensive states for LLC maintenance.

Step 4: Get an EIN (Employer Identification Number)

An EIN is like a Social Security number for your business. You need one to open a business bank account, hire employees, and file taxes. The great news? Getting an EIN from the IRS is completely free and takes only minutes if you apply online at IRS.gov. You will receive your EIN immediately upon completion. Be wary of third-party services that charge for this free service.

Step 5: Create an Operating Agreement

An operating agreement is an internal document that outlines how your LLC will be run. While not required in every state, it is strongly recommended for all LLCs, even single-member ones. An operating agreement typically covers:

Ownership percentages and capital contributions
Profit and loss distribution
Management structure and voting rights
Rules for adding or removing members
Dissolution procedures
Buy-sell provisions

States that require operating agreements include New York, California, Delaware, Maine, and Missouri. Even if your state does not require one, having a written agreement helps maintain your liability protection and prevents disputes.

Step 6: Obtain Necessary Permits and Licenses

Depending on your industry and location, you may need federal, state, and/or local licenses and permits. Common examples include a general business license from your city or county, a sales tax permit if you sell taxable goods, professional licenses (contractors, real estate agents, etc.), health department permits for food businesses, and a home occupation permit if you operate from home.

The SBA (Small Business Administration) has a useful tool for identifying which permits you need based on your business type and location.

Annual Maintenance Costs

Forming an LLC is not a one-time expense. Most states require annual or biennial filings to keep your LLC in good standing. Here is what to expect:

Annual report fees: Range from $0 (Ohio, Arizona) to $500+ (California's $800 franchise tax). Most states charge $50-$200 for an annual report.
Registered agent fees: $50-$300/year if using a professional service
State franchise or privilege taxes: Some states charge a flat fee or income-based tax just for the privilege of doing business there. Delaware charges $300 per year, California charges $800, and Texas charges a franchise tax based on revenue.
Business insurance: While not legally required in most cases, general liability insurance ($400-$1,500/year) is strongly recommended.

State-by-State Cost Comparison

Here is a snapshot of total first-year costs (filing fee + annual report/franchise tax) for popular states:

Wyoming: $100 filing + $60 annual report = $160 first year
Delaware: $90 filing + $300 franchise tax = $390 first year
Florida: $125 filing + $138.75 annual report = $263.75 first year
Texas: $300 filing + $0 annual report (franchise tax based on revenue) = $300+ first year
New York: $200 filing + $9 biennial report + publication requirement ($500-$2,000 in some counties) = $700+ first year
California: $70 filing + $800 franchise tax = $870 first year
Nevada: $75 filing + $150 business license + $150 annual list = $375 first year

If you live and do business in one state, form your LLC there. Forming in “business-friendly” states like Delaware or Wyoming only makes sense if you operate nationally or have specific legal needs, because you would still need to register as a foreign LLC in your home state.

Common Mistakes to Avoid

Commingling personal and business finances. Open a dedicated business bank account and keep transactions separate. Mixing funds can “pierce the corporate veil” and eliminate your liability protection.
Forgetting annual filings. Missing your annual report can result in penalties, late fees, or even administrative dissolution of your LLC.
Skipping the operating agreement. Even as a single-member LLC, this document is your safety net.
Not understanding self-employment taxes. LLC members typically pay self-employment tax (15.3%) on their share of profits. Consider an S-Corp election if your profits are high enough to benefit.
Paying unnecessary fees. Many online services charge $200+ to file documents you can submit yourself for the state fee alone. Always check if you can file directly with the Secretary of State.

Estimate Your LLC Costs

Ready to find out exactly what it will cost to form an LLC in your state? Use CalcViral's LLC cost calculator to get a detailed breakdown of filing fees, annual maintenance costs, and total first-year expenses for all 50 states. The calculator also shows optional costs like registered agent services and operating agreement preparation.

Final Thoughts

Starting an LLC in 2026 is more accessible than ever. Most states offer online filing, and the entire process can be completed in as little as a day. The key is to do your research, understand your state's specific requirements, and budget for both formation and ongoing maintenance costs. An LLC is an investment in your business's future, protecting your personal assets while giving you the flexibility to grow on your terms.